Lithium Americas Secures $2.26 Billion for US Lithium Project

Lithium Americas Corp. has secured a monumental $2.26 billion loan from the U.S. Department of Energy (DOE) to fund the development of its Thacker Pass lithium project in Humboldt County, Nevada. This financing, combined with a strategic investment from Orion Resource Partners and a joint venture with General Motors (GM), positions Lithium Americas to become a key player in the domestic lithium supply chain.

The DOE loan, one of the largest government-backed financings for a U.S. critical minerals project, underscores the federal government's commitment to reducing American dependence on foreign suppliers for critical minerals. The loan, which includes funding for interest accrued during construction, has a fixed interest rate based on U.S. Treasury rates, providing a stable financial foundation for the project.



Orion Resource Partners, a leading global investment firm dedicated to metals and materials, has committed a $250 million investment. This includes the purchase of senior unsecured convertible notes worth $195 million, a $25 million payment for minerals produced and gross revenue generated by Thacker Pass, and an additional $30 million in convertible notes available through a delayed draw facility. This investment satisfies all remaining equity capital fundraising requirements under the DOE loan, ensuring that Lithium Americas has the necessary capital to proceed with the project.

The joint venture with GM involves the automaker acquiring a 38% asset-level ownership stake in Thacker Pass for $625 million in total cash and letters of credit. This partnership brings in significant operational expertise and resources from GM, which is a leading player in the electric vehicle (EV) market. GM's involvement ensures that the project benefits from advanced technology and operational best practices, enhancing the efficiency and effectiveness of the Thacker Pass operations.

The project is expected to create nearly 2,000 direct jobs, including 1,800 skilled contractors, during its three-year construction phase. Lithium Americas and its engineering, procurement, and construction management contractor, Bechtel, have entered into a National Construction Agreement with North America’s Building Trades Unions. This agreement ensures a skilled workforce for the construction phase, which is crucial for the successful execution of the project.

While the financing package is impressive, there are potential risks and challenges associated with the DOE loan. The loan's terms include customary covenants and events of default for a project finance loan facility, which could pose challenges if not met. For instance, the loan requires the Company to secure additional corporate working capital and project finance model bring down, which could be difficult to achieve in a challenging lithium market environment.

Additionally, the loan's interest rates are fixed from the date of each monthly advance for the term of the loan at applicable U.S. Treasury rates, which could pose a risk if interest rates rise in the future. This could increase the project's financing costs and impact its financial performance. Furthermore, the loan's tenor of 24 years from the date of the first draw could pose a risk if the project's financial performance does not meet expectations. The loan's long tenor could result in a significant debt burden for the Company, which could impact its ability to invest in other projects or pursue other opportunities.

Despite these risks, the financing package for the Thacker Pass project is a significant milestone for Lithium Americas and the U.S. lithium industry. The project is expected to produce 40,000 tonnes per year of battery-quality lithium carbonate, supporting the growing demand for critical minerals in the EV market. With the support of the DOE, Orion Resource Partners, and GM, Lithium Americas is well-positioned to become a key player in the domestic lithium supply chain.